Bond Funds

[smooch]

Can someone give me a simple explanation of the difference between return and yield on a bond fund?

[Gone4Good]

Return includes short-term gains and losses.

Yield expresses a bond's "return" if held to maturity.

Example: If you buy a bond on Jan 1 yielding 5% and interest rates go down by year end, your 1 year return (coupon plus capital gain) will be greater than 5%. But if you hold that bond to maturity your return for all periods will be 5%, equal to its original yield.